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Investing.com - European stock markets traded lower Tuesday, handing back some of the prior month's gains as investors digested key corporate results as well as disappointing manufacturing activity data.
At 04:05 ET (08:05 GMT), the DAX index in Germany traded 0.6% lower, the CAC 40 in France dropped 0.5%, while the FTSE 100 in the U.K. traded 0.2% lower.
European manufacturing sector struggles
The main European indices recorded healthy gains during July, with the pan-Europe Stoxx 600 up 2%, helped by signs that European consumer inflation had peaked.
However, the aggressive monetary policy tightening that the European Central Bank has undertaken to curb inflation has had an impact on growth in the region.
The extent of this was illustrated by the release of manufacturing PMI numbers from the eurozone and many of its members.
Spain was the first out of the blocks, with its manufacturing PMI falling further into contraction territory. Italy's PMI showed some improvement, but remained firmly below the 50 line that separates expansion from contraction. However, it was Germany that really disappointed, as the manufacturing PMI in the eurozone's largest economy fell to 38.8 in July from 40.6 in June.
Data from China earlier in the session showed the Caixin/S&P Global manufacturing purchasing managers' index fell to 49.2 in July from 50.5 in June, indicating that factory activity in the second largest economy in the world contracted in yet another sign of the country’s post-pandemic recovery's struggles.
Additionally, data from the British Retail Consortium, released early Tuesday, showed that prices in U.K. stores fell for the first time in two years, coming in 0.1% lower in July than in June, while annual inflation dropped to 7.6% in July from 8.4% the prior month.
The Bank of England meets on Thursday, and is widely expected to raise interest rates for the 14th consecutive meeting as it continues to battle the highest inflation rate among the major industrialized nations.
HSBC announces $2 billion buyback
The European earnings season is now in full flow.
HSBC (LON:HSBA) stock rose 2.8% after Europe’s largest bank announced a $2 billion buyback after reporting a higher profit and revenue for the first half of 2023, aided chiefly by stronger margins amid rising interest rates.
The Asia-focused bank also raised its near-term return on tangible equity goal, a key performance target.
BP (LON:BP) stock rose 2% after the oil major raised its dividend and announced a share buyback despite an earnings drop, while Diageo (LON:DGE) stock rose 1.9% after the spirits giant announced a 6.5% rise in sales for the past year as it was able to pass higher costs onto its resilient customers.